A company is planning to purchase a machine that will cost $27,600 with a six-year life and no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? Sales $ 94,000 Costs: Manufacturing $ 50,100 Depreciation on machine 4,600 Selling and administrative expenses 34,000 (88,700) Income before taxes $ 5,300 Income tax (35%) (1,855) Net income $ 3,445
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Home » Business » A company is planning to purchase a machine that will cost $27,600 with a six-year life and no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year.